Slumping Banks Lead Stocks to Three-Day Slump

U.S. stocks landed in the red on Monday for the third session in a row as banks like Citigroup (C) retreated amid concerns over slumping trading revenue and as enthusiasm over the Federal Reserve's decision to delay dialing back monetary stimulus continues to fade.

Today's Markets

The Dow Jones Industrial Average fell 47.71 points, or 0.32%, to 15401.38, the S&P 500 dropped 8.07 points, or 0.47%, to 1701.84 and the Nasdaq Composite lost 9.44 points, or 0.25%, to 3765.29.

Stocks ended the day off their worst levels, but still with their first three-day losing streak since August 19.

Asset managers like KKR (KKR) and online brokers such as Charles Schwab (SCHW) also suffered selloffs.

Monday's lone economic report revealed the U.S. manufacturing sector unexpectedly slowed down in September. The Markit flash purchasing managers index dipped to a three-month low of 52.8, down from 53.1 in August and below forecasts for a rise to 54.0.

The domestic PMI index was hurt by the slowest increase in new orders since April. A level above 50 indicates expansion.

In Europe, despite surprising support for an anti-euro party, German Chancellor Angela Merkel appears set for a third term.

While her CDU party outperformed expectations, it failed to reach an absolute majority, meaning the party must find a coalition partner. Teaming up with the Social Democrats, the most likely partner, would likely signal Germany remains committed to the common currency.

"It may take a few weeks to sort this out, but Germany's European stance is unlikely to change," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, wrote in a note to clients.

As part of the sweeping change, Alcoa (AA), Bank of America (BAC) and Hewlett-Packard (HPQ) are being replaced by Goldman, Nike (NKE) and Visa (V).

Meanwhile, Wall Street continues to react to the Federal Reserve’s surprise decision last week not to dial back monetary stimulus.

In a pair of speeches Monday morning, Fed officials William Dudley and Dennis Lockhart signaled they're not in a rush to taper quantitative easing, the central bank's bond-buying program.

On the domestic political front, Wall Street continues to closely monitor Washington's struggles to avoid a government shutdown and raise the debt ceiling. The latter event threatens to rattle markets as it did in 2011 when Standard & Poor's downgraded the country's credit rating.

"This crisis is sure to last until Christmas and thus could become a headwind for the economy -- maybe not a howling headwind, but in a recovery that's still fragile, this nonsense doesn't help," Greg Valliere, chief political strategist at Potomac Research Group, wrote in a note to clients.

In the commodities complex, crude oil has dropped 4.2% since Wednesday, its worst three-day decline in three months. Crude settled at $103.59 a barrel, down $1.16, or 1.11%. Gold declined $5.60 a troy ounce, or 0.42%, to $1,326.90.